FNB Smart Solutions MAINSTREAM MARKET BANKING 1
FNB has a customer focused segmentation strategy Income / Turnover >R600m GTS Customer Numbers 868 ½ Year Profit (Dec 10) 230m N/A Public Sector 15k (173) m* R0 R600m Commercial 489k 1 078m >R1m Wealth 56k 161m Consumer R100k R1m 2.1m 1 418m R0 R100k Mainstream 4.2m 648m Africa 1.0m 740m * Includes FNB Support Total 7.9m 4 102m *Represents profit for the total FNB Support area which includes Public Sector Banking 2
Mainstream Market Segmentation Mainstream Sizing, 2010 Total SA Banked population: 62.5% Adult population - South African residents 16 years and older Upper (R60-100k pa) Middle (R24-59.9k pa) Lower (R0-23.9k pa) 2.3m Banked 91% 4.6m Banked 80% 19.2m Banked 43% Mainstream Popn (18+): 26.10 million Banked Mainstream: 14.03 million (54%) Unbanked Mainstream 12.07 million (46%) Source: Amps 2008 2010, SGS Analysis, Finscope 2010, Statssa, Sassa Economically active SA population: 54% Population 15 64 yrs 32.3m. Not economically active 14.8m. 20% of SA adult population are dependent on social grant as source of income 14,9m beneficiaries 51 % of social grants are paid in cash 3
Main bank market share 2009 2010 2009 2010 2009 2010 Lower Mainstream Middle Mainstream Upper Mainstream 3 rd 2 nd 2 nd Source: Amps 2009, 2010 4
FNB Market Share Size of Industry (quarterly disbursements) FNB Market Share Size of Industry (quarterly disbursements) Unsecured loans market share 12% Unsecured and Short Term Credit Market: FNB Market Share - Customers earning up to R7,500 p.m. R 8,000,000,000 10% 9.8% R 7,000,000,000 8% 6% 6.7% 6.0% 7.1% 8.5% 7.9% 7.7% 7.7% 7.4% 7.0% 6.0% 6.7% 7.4% R 6,000,000,000 R 5,000,000,000 R 4,000,000,000 4% R 3,000,000,000 R 2,000,000,000 2% R 1,000,000,000 0% Mar '08 Jun '08 Sep '08 Dec '08 Mar '09 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10 Mar '11 R 0 12% FNB Market Share Unsecured Credit Market: FNB Market Share - Customers earning over R7,500 p.m. Market Size (quarterly disbursements) R 14,000,000,000 10% 9.8% R 12,000,000,000 8% 6% 4% 2% 5.1% 4.3% 5.2% 4.9% 5.1% 4.6% 3.9% 4.2% 4.5% 4.2% 4.9% 6.7% R 10,000,000,000 R 8,000,000,000 R 6,000,000,000 R 4,000,000,000 R 2,000,000,000 0% Mar '08 Jun '08 Sep '08 Dec '08 Mar '09 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10 Mar '11 FNB Market Share Market Size (quarterly disbursements) R 0 5
Where we make our money Total Revenue Diversification ratio 6% 18% 6% 8% 1% 61% Transactional Banking Unsecured Loans Housing Finance Cellphone Banking FNB Life Other 22% Interest turn NIR 78% Net Profit before Tax Balance Sheet 22% 11% -23% 67% Transactional Banking Unsecured Loans Housing Finance Cellphone Banking FNB Life Unsecured loans, 22% Secured loans, 78% 9% 14% Investments 6
FNB Smart Solutions EasyPlan EasyAccount EasyLoan EasyFuneral Plan Housing Finance Smart Bond Smart Product House Smart Acc. Smart Cheque Temp Loan Stokvel Acc. Mzansi Acc. Social Grant Acc SmartSave Acc Smart Housing Plan SmartSpend Loan FNB Life Connect ewallet Solutions Law-on- Call Funeral Credit Life Cover Connect Talk Connect Surf o3g oadsl Send Money PayWallet Cellphone Banking Solutions Banking InContact Prepaid Lotto Cellphone Contracts 7
Customer needs and banking challenges are unique Money too tight to mention affordability & unemployment Irregular income Low levels of financial literacy prefer simple products, processes & pricing Language Access to banking Time and cost of travel Banking Business hours 8
Our high level strategy Holistic approach to customers financial needs. We have solutions to address all these needs 4 Quadrants: Save, Transact, Insure, Borrow Cross-sell of value-added services and products that improves customer retention Reducing cost in servicing mainstream market customers requires low cost channels & efficient processes Customer Education and Financial Literacy Employer Solutions 9
We have a range of service options Cellphone Mini ATM Full ATM (Real time deposit taking) Full ATM Mobile Branch FNB EasyPlan Mini FNB Full Branch 10
FNB EasyPlan is our new, customised solution Lower costs leaner operating model, Cashless & paperless Deposit Taking ATM real-time value, no card required Product offering only 3 products Quick & efficient service Simplicity products, communication & price structure Friendly service & communication in home language Ease of access convenient locations & extended operating hours 11
Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 FNB EasyPlan s Points of Presence rollout ahead of target 140 120 117 100 91 99 80 76 60 59 65 67 67 45 40 36 20 0 1 1 2 3 4 4 4 4 7 9 15 22 27 Actual Target 12
FNB EasyPlan Branches are aspirational 13
FNB EasyPlan s Products Suite 14
Cellphone Banking doubled in one year 3 million registered customers African Expansion Active Cellphone Banking Customers - South Africa 0% 0% Cellphone banking improves customer retention Reduces cost of banking and travel cost 32% MAINSTREAM CONSUMER Most transactions occur after-hours 68% WEALTH COMMERCIAL 24/7 Banking 3,500,000 Cellphone Banking Registered Base 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Apr '05 Apr '06 Apr '07 Apr Total '08 Apr '09 Apr '10 May '11 15
including our African Subsidiaries Channel Islands Jersey India Nigeria Tanzania (new Subsidiary) Angola Mozambique Zambia Namibia Swaziland Botswana Lesotho Cellphone Banking in country 16
Cellphone Banking Users Age Distribution 3% 7% 13% 28% 0yrs-18yrs 19yrs-25 yrs Race Demographics 4% 0% 7% BLACK WHITE 20% 29% 26yrs-32 yrs 33yrs-40yrs 41yrs-50yrs 51yrs + 15% 74% COLOURED ASIAN UNKNOWN Active Cellphone Banking Customers Cellphone Banking Volumes 17.9% Cellphone Banking Values 57.4% 42.6% 55.8% 44.2% 82.1% FNB CB Rest of the Industry FNB CB Rest of the Industry FNB CB Rest of the Industry Source: Latest data from SARB as at 30 June 2010 17
ewallets The Next Big Thing Total value sent from FNB accounts to ewallets since launch: R615m - May 2011 560 000 ewallets Next African rollout Cross-border transactions Retail Partnerships 18
Volumes FNB Housing Finance FNB Life Address housing shortfall Generates 22% of the segment s profits Assist with creating increased supply (new Low cost and simple risk only products housing) Assist with finance to enable demand Cover from R15 per month Good ROE & significantly lower NPLs Profit Growth compared to consumer market 2nd highest market share of new mortgages 2007 2008 2009 2010 Funeral Active Policies 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 19
FNB Housing Finance Energy Efficiency Alternative Building Technology 10 houses installed Part funding from German DFI (GIZ) Actual Monthly savings of R300 pm Next step large scale rollout Houses already built - 3 Speed of erection 3 weeks Quality control in production environment Scale benefits Core material used - waste streams (beneficiation process) Potential cost savings - 20% Next step market acceptance study linked with actual sales 20
Not a 1 size fits all approach Smart Choices PAYU Smart Account Regular income earners with few transactions per month. Smart Account Zero No monthly fees designed for irregular income earners Smart Account Unlimited Fixed fee pm unlimited electronic transactions @ FNB incl. R10 000 funeral cover Regular income earners with the need to manage their budget 21
Financial Literacy & Education Basic Financial Literacy Training covers: Be Financially Smart program Basics of financial planning, financial transactions, savings, key issues when borrowing and Insurance Radio program 36 week -19 Radio station program covering all 11 languages Reached in excess of 17m people Series of financial topics 4 Quadrants (Transacting, Saving, Borrowing & Insuring) Face to Face - classroom style Worksites (70%), Community Centres & High Schools (30%) 6 Educators in 6 Provinces Training guide in vernacular languages FNB Tip sms s (real-time advice on how to reduce bank charges) Home Owner Education program for first-time home owners 22
FNB EasyPlan / Capitec comparison Most common fees The below table shows some of the most common transactions for Capitec and EasyPlan, and highlights the cheapest fee (in blue). FNB EasyPlan is the cheapest on 9 of the fees while Capitec is only cheapest on 6 fees. The fees shown in orange are the fees where FNB EasyPlan and Capitec have the same fee. Transaction Type Capitec 1 March 2011 FNB Easy Account 1 July 2011 Local point-of-sale purchases Free Free Cash withdrawal at Tillpoint ( Shoprite, Checkers or PEP ) with purchase R 1.00 R 0.90 Own Bank ATM cash withdrawal R 3.75 R 2.95 Own Bank mini ATM cash withdrawal R 3.75 R 2.95 Other bank ATM cash withdrawal R 7.00 R 7.70 International point-of-sale cash withdrawal R 4.75 R 2.95 Cash deposit in Branch R0.75c/R100 2.95* Electronic Deposit ( EFT ) Free Free Salary cheque deposit Free R 2.95 Non-salary cheque deposit R 3.75 R 2.95 Tranfer between linked accounts Free Free Transfers between Capitec and Other Bank's R 2.75 R 2.95 Monthly Administration or account fee R 4.50 R 3.95 Account statement R 2.75 R 2.95 Stop order/debit order R 2.75 R 2.95 Replacement/Additional card R 30.00 R 25.00 PIN reset R 2.75 Free Own Bank ATM withdrawal declined (insufficient funds) Free Free Returned debit order ( unpaid item) R 3.75 R 5.00 *FNB Cheaper for all deposits more than R300 23
FNB EasyPlan / Capitec comparison Typical Transactor A typical FNB EasyPlan Customer Comparison of FNB EasyPlan and Capitec on the FNB EasyPlan behaviour FNB EasyPlan Basket Nr of txns FNB FNB Capitec Global per annum Easy Plan (Current) Easy Plan (New) One Account Stop Orders/Debit Orders 24 R 2.95 R 2.95 R 2.75 Statement At Branch 4 R 2.95 R 2.95 R 2.75 Inter Account transfer 24 R 0.00 R 0.00 R 0.00 Debit Card Purchases 24 R 1.00 R 0.00 R 0.00 Cash Withdrawal at Till Point 24 R 0.90 R 0.90 R 1.00 Cash Deposit 4 R 2.95 R 2.95 R 7.50 Cash Withdrawal at own Bank ATM 48 R 2.95 R 2.95 R 3.75 Cash withdrawal at other bank's ATM 4 R 7.70 R 7.70 R 7.00 Savings Pocket Monthly Fee 12 R 0.00 R 0.00 R 0.00 Monthly Account Fee 12 R 3.95 R 3.95 R 4.50 Yearly Costs R 359.80 R 335.80 R 393.00 Montly A Costs typical Capitec Customer R 29.98 R 27.98 R 32.75 Comparison of FNB EasyPlan and Capitec on the Capitec behaviour Capitec Basket Nr of txns per month FNB Easy Plan (Current) FNB Easy Plan (New) Capitec Global One Account Cash Withdrawals (own ATMs) 2 R 2.95 R 2.95 R 3.75 Cash Withdrawals Other ATMs 1 R 7.70 R 7.70 R 7.00 Balance Enquiries (own ATMs) 7 R 0.00 R 0.00 R 0.00 Account Statements 1 R 2.95 R 2.95 R 2.75 Interaccount Payments ( Other bank accounts) 2 R 2.95 R 2.95 R 2.75 Monthly Administration Fee 1 R 3.95 R 3.95 R 4.50 Debit Card Purchases 6 R 1.00 R 0.00 R 0.00 Debit Orders 2 R 2.95 R 2.95 R 2.75 Yearly Costs R 459.60 R 387.60 R 393.00 Montly Costs R 38.30 R 32.30 R 32.75 FNB EasyPlan is now cheapest on both transaction behaviours 24
ewallet Competitors Can Send money to anyone with a Cellphone, they can withdraw the money without using a card Transactional Account FNB ewallet ABSA Cashsend Nedbank NedBank M-PESA M-pesa Standard Bank Shop Cost to send money to ewallet R6.90 + R1.05 per R100 R 8.00 (values between Values 0-1000: R10.00 (Included in packaged 0 and R1000) Values > R1000: R15.00 options) R 10.00 Example 1 - Send R500 R 8.00 R 12.15 R 10.00 R 10.00 Example 2 - Send R1000 R 8.00 R 17.40 R 10.00 R 10.00 ewallet/cashsend Account First Cash Withdrawal Free Free Free Free Subsequent withdrawals R5 per R500, max R15.00 Not Available Not available to unregistered users Not Available FNB s ewallet has additional features not available at ABSA/Standard bank, e.g. Prepaid Purchases R2 Send money to another ewallet R2 Purchase in a store Free Nedbank s M-PESA is the closest competitor. 25
Smart Account Competitors The following comparison is based on the Solidarity behaviour for a customer earning R7,500 per month (their smallest transaction category). FNB is the cheapest in this category. FNB Smart Nedbank - ABSA Flexi Standard Bank Transmission Account - Transactor Plus - Transaction PAYU Account E Plan P.A.Y.U Volume Monthly Transaction Fees Monthly Account Fee 1 R 11.00 R 11.00 R 9.00 R 10.00 Debit card purchase ( R500) 2 R 4.20 R 5.30 R 4.50 R 4.00 Cashback at POS ( R500) 2 R 1.80 R 18.00 R 4.50 R 10.00 Own ATM balance enquiry 1 R 0.00 R 0.00 R 0.00 R 1.50 incontact/internet/cellphone banking subscription 1 R 0.00 R 21.95 R 17.00 R 22.00 incontact per sms 12 R 0.00 R 5.76 R 0.00 R 0.00 Online transfer (R500) 1 R 3.30 R 3.15 R 3.65 R 5.00 Online transfer (R1000) 1 R 3.30 R 3.15 R 3.65 R 5.00 Electronic archive statement 1 R 5.50 R 5.50 R 0.00 R 10.80 Online balance enquiry 1 R 0.00 R 0.00 R 0.00 R 0.00 Online SMS notification 2 R 2.00 R 0.96 R 1.30 R 1.70 Online amendment of scheduled payment 1 R 0.00 R 0.00 R 0.00 R 15.20 Online scheduled transfer ( R500) 1 R 3.30 R 3.15 R 3.65 R 5.00 Online scheduled payments ( R500) 2 R 14.40 R 15.00 R 9.60 R 12.70 Internal debit order ( R500) 1 R 3.30 R 3.15 R 3.25 R 5.00 External debit order ( R5000) 2 R 17.60 R 12.00 R 11.00 R 12.70 Total 32 R 69.70 R 108.07 R 71.10 R 120.60 26
It is the year to be with FNB, join us! 27